Interest on a house loan is tax deductible.

Paying taxes is an important duty of every citizen, especially those who meet the income threshold must pay "income tax" every year. However, the government also offers "tax relief measures" to help reduce the burden and encourage spending in various designated areas. Certain specified expenses can be used as additional tax deductions.

Many people are familiar with tax deductions for life insurance premiums or investments in certain mutual funds. However, there is another important benefit that shouldn't be overlooked for those paying off a mortgage: "interest on house loans," or house loan interest, which is included in each monthly mortgage payment. This can also be used to reduce taxes.

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How much house loan interest can be deducted from taxes?

For those currently paying off a house loan with a financial institution operating within Thailand, whether it's a detached house, semi-detached house, townhouse, townhouse, commercial building, or condominium, the "house loan interest" can be deducted. It's not necessary to have resided in the property for a full year. The amount deducted can be used to reduce personal income tax based on the actual amount paid. The total maximum deduction is 100,000 baht per year. If you have taken out loans to purchase more than one house, you can claim deductions for each house. For example:

If you own two houses, and the interest paid on the first house totaled 50,000 baht, and on the second house totaled 60,000 baht, you can deduct 100,000 baht in interest, even if the actual interest paid was 110,000 baht. However, the deductible interest must come from a loan agreement for the purchase or construction of a residence, whether it's a house, condo, or a house built on your own land, and the house, condo, or property must be mortgaged as collateral.

If there are co-borrowers for the house, the deduction will be averaged among the co-borrowers, regardless of whether they have income or not, or whether they also claim the house loan interest deduction. The calculation formula is as follows: Total house loan interest deduction, maximum 100,000 baht ÷ number of co-borrowers. For example, if you actually paid 100,000 baht in house loan interest with 2 co-borrowers, each co-borrower is entitled to a deduction of 100,000 baht ÷ 2 = 50,000 baht (even if one co-borrower actually paid more in installments or interest).

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Procedure for Claiming house Loan Interest Tax Deduction

Currently, the process for submitting and requesting information to claim house loan interest tax deductions is no longer complicated. Simply provide consent to the bank to request the income tax exemption by submitting house loan interest information to the Revenue Department. The bank will then directly send the house loan interest payment information to the Revenue Department's database. Customers can then immediately claim the house loan interest tax deduction without having to fill out the information themselves. This increases convenience and reduces the complexity of preparing and submitting documents. (The bank will still send the loan interest certification document (Form L.Y. 02) to customers as usual.)

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Regarding the deduction received from house loan interest... This could result in a lower tax burden or a refund if tax has already been withheld from your income. This lump sum can then be used to reduce the principal on your house loan by making extra payments, thereby lowering interest because house loans calculate interest on a reducing balance basis. This can also help you own your house faster, leading to improved financial well-being in all aspects of life.

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Thank you for the valuable information from Thansettakij.